Last week several Members of Congress, spearheaded by Rep. Ken Calvert (R-CA), sent a letter to the Government Accountability Office (GAO) requesting that a full inventory be conducted of all U.S. government holdings of all Republic of China (ROC) sovereign bonds issued between Jan 1, 1900 and December 31, 1949, whether considered to be in default or not.
"The People's Republic of China has refused to honor the debt incurred by prior regimes, thereby defaulting on hundreds of millions of dollars of debt incurred during the first half of the twentieth century," said Rep. Calvert. "Its refusal to honor its bond obligations as a successor government may violate its obligations as a member of the World Trade Organization. I am concerned that the U.S. government may still hold a portion of these bonds, and have asked the GAO to conduct an inventory of all Chinese bonds held, or previously held, by the U.S. government, and the value of these bonds."
The Chinese government issued hundreds of millions of dollars in bonds from 1900 to 1949. The most prevalent American-held bond was the 1913 Chinese Government Five Percent Reorganization Gold Loan Bearer Bond, which matured in 1960. Printed on the bonds is the following statement: "These obligations are intended to be binding upon the Government of China and any successor government." However, when the PRC came to power in 1949, it refused to honor or recognize debts incurred by the previous governments, thereby defaulting on the bonds held by investors and foreign governments. These investors are entitled to remuneration.
Signers of the letter include: Rep. Senator James Inhofe (R-OK), Rep. Ed Royce (R-CA), Rep. Frank Wolf (R-VA), Rep. Ann Buerkle (R-NY), Rep. Steve Pearce (R-NM), Rep. Lynn Westmoreland (R-GA), Rep. Marsha Blackburn (R-TN), Rep. Jeff Miller (R-FL), and Rep. Paul Gosar (R-AZ).